Starbucks courts millennials with $10 coffee at new Reserve bars

Wed Dec 7, 2016 11:43am EST
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By Lisa Baertlein and Tim Baysinger

LOS ANGELES/NEW YORK (Reuters) - Starbucks Corp Chief Executive and co-founder Howard Schultz's plan to build a new prestige brand is a bet that moving upscale can raise the profile of the world's largest coffee brand with millennials like Megan Sauers. 

Schultz in April will move into the role of executive chairman to focus on opening 1,000 new "Reserve" brand stores and adding Reserve bars to 20 percent of its traditional cafes, which now number 25,000 around the globe.

Starbucks also envisions as many as 30 large, showcase Reserve Roastery and Tasting Rooms in major cities around the world.

Schultz's transition marks a turning point for Starbucks, which introduced millions of people around the world to higher quality coffee and espresso drinks and now must find a way to avoid being labeled pedestrian when compared with upscale rivals like Blue Bottle and Intelligentsia, which are popping up in U.S. cities.

"Starbucks is the millennials' parents' coffee house and Starbucks is acutely aware of that," said Ric Rhinehart, executive director of the Specialty Coffee Association of America.

Its Reserve projects are "a reminder that they did this first and they do this best," said AB Bernstein analyst Sara Senatore.

Reserve stores will be about twice the size of typical stores and exclusively sell and serve exotic, small-lot coffees that can cost $50 per 8-ounce bag. The first are planned for Seattle and Chicago.

The new Reserve stores and Roasteries will serve wine, beer and spirits and bake their own pastries from Princi, a boutique Italian bakery and Starbucks partner.   Continued...

Sandy Roberts pours samples of Starbucks Reserve Sun Dried Ethiopia Yirgacheffe coffee during the company's annual shareholders meeting in Seattle, Washington, U.S. on March 19, 2014. REUTERS/David Ryder/File Photo